Silicon Valley's largest tech accelerator is funding an experiment in crowdfunded healthcare

Crowdfunding gets a lot of attention when it gives rise
to oddball
games and
novelty technology, but Silicon Valley's largest startup
accelerator believes the real bet is on crowdfunded healthcare.

Y Combinator, the company responsible for launching Airbnb,
Dropbox, and Reddit, has announced that it will invest in
Watsi — a nonprofit that has
brought healthcare to more than 11,000 people in 24 countries
through nearly 22,000 online donations.

Sam Altman, president of YC, explains that Watsi's approach to
healthcare avoids a huge number of operational inefficiencies. A
recent report from the World Health Organization calculated
that 20-40% of
all health spending worldwide gets wasted. But
Watsi's crowdfunding model makes transparency a top priority
— each patient's received donations and healthcare provider are
logged in a master spreadsheet available on Watsi's website.

"Funding individual patients encourages more people to donate,
but it also results in patient-level data that makes it easier to
identify fraud, evaluate the quality of care, measure health
outcomes, etc.," Watsi co-founder Chase Adam
told VentureBeat, adding the project is an attempt to use
data to rethink how healthcare is funded.

Watsi expects to launch its trial within a couple
months and have it last through 2017.

When a family visits a hospital that has partnered
with Watsi, but the patient can't afford to pay for the
necessary care, a staff member will ask if they want to put their
case on the site. If he or she agrees, the site's
donors will then have the opportunity to make online donations
straight to the patient. Funds will be transferred to the
hospital's bank account and directly fund the patient's
treatment.

As a patient receives care, the hospital will update
donors on his or her progress. Treatments won't cost more
than $1,500, and the partner hospitals will specifically choose
cases that have a high degree of treatability. The company has
also created a general fund that people and companies can donate
to if all patients on Watsi have already been funded. In
those cases, the company will give "100%
of every donation to a patient as soon as one is
available."

Watsi has raised $7.5 million in funding since it started
working with YC four years ago. YC's new investment in the
nonprofit (an undisclosed sum) will let Watsi continue to
build its online platform and better look for wasted
expenditures, such as unnecessary tests or ineffective
treatments.

By creating a leaner form of healthcare, which attempts
to lower medical costs by promoting transparency and
spotting fraud and errors in real-time, Watsi believes it can
reduce the public burden of caring for the ill. Instead of
bearing exorbitant, hard-to-understand bills, recipients of Watsi
donations would receive fully crowdfunded care.

During the experiment, one of Watsi's primary goals will be
to expand the treatments it can fund while still keeping
costs low.

If the trial shows that direct-to-patient donations
can indeed fund effective healthcare at a fraction of the
usual cost, Watsi will make the software available to governments
for official use. And if trials in the developing world show
promise, the system could expand to places like the US,
where healthcare costs continue to rise.